Is a validated Act, valid only for taxes collected and not for taxes not collected Supreme Court refers issue to Larger Bench
In 1992, Parliament passed The CESS and Other Taxes on Minerals (Validation) Act to grant sanctity to certain laws declared void by the Supreme Court. The Validation Act was passed only with a view to absolve the states of their liability to refund illegally collected taxes as that would have cast a heavy financial burden on the States.
So what was enacted was, if you had paid the taxes, you get no refund even though the tax was illegal. But what happens if you had not paid the taxes during the period. Can it be collected under the Validation Act?
“NO”. Asserted the Supreme Court in the famous ‘District Mining Officer Vs. TISCO on Appeals & Writ Petitions from several States.
Does it mean that the idiot who paid the tax does not get a refund while the smart avoider gets the benefit? Supreme Court raised this question while referring to the above case. The Supreme Court observed, suppose somebody has paid the taxes, there may be another person who has not paid it. The latter person cannot be placed at a better footing than the former one.
Difference between levy & collection :
The Supreme Court differentiated between levy & collection.
1.In Taxing Statute, the words ‘Levy & Collect' are not synonymous.
2.Levy would mean assessment or charging or imposing tax.
3.Collect would mean the physical realization of the tax levied or imposed.
4.Collection of tax is a stage subsequent to levy.
5.Enforcement of levy could only mean realization of the tax imposed or demanded.